Is more always better? The returns to alcohol by volume—Evidence from the Austrian “Spirits Trophy 2023”

Bernd Frick and Daniel Kaimann

Journal of Wine Economics, 2024, vol. 19, issue 4, 375-385

Abstract: Hedonic models that seek to explain the observable variation in wine and beer prices have so far included alcohol by volume (ABV) only as a control variable without paying much attention to the magnitude of the coefficient and without questioning the implicit assumption that the impact of ABV on bottle prices is indeed linear. Using data from the “Austrian Spirits Trophy 2023,” we find the relationship between ABV and bottle prices to be nonlinear, with statistically significant effects observed for linear, squared, and cubic terms of alcohol content. Moreover, we find expert evaluations of spirits to demonstrate a nonlinear relationship with ABV too.

Date: 2024
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